factors affecting the customer satisfaction in e-banking - Management ...

Kumbhar V. M. mrp.ase.ro

FACTORS AFFECTING THE CUSTOMER SATISFACTION IN E-BANKING: SOME EVIDENCES FORM INDIAN BANKS MANAGEMENT RESEARCH AND PRACTICE VOL. 3 ISSUE 4 (2011) PP: 1-14

FACTORS AFFECTING THE CUSTOMER SATISFACTION IN E-BANKING: SOME EVIDENCES FORM INDIAN BANKS Vijay M. KUMBHAR

Volume 3, Issue 4 / December 2011

Management Research and Practice

Abasaheb Marathe College, Rajapur (Maharashtra) 416702, India [email protected]

Abstract This study evaluates major factors (i.e. service quality, brand perception and perceived value) affecting on customers’ satisfaction in e-banking service settings. This study also evaluates influence of service quality on brand perception, perceived value and satisfaction in e-banking. Required data was collected through customers’ survey. For conducting customers’ survey likert scale based questionnaire was developed after review of literature and discussions with bank managers as well as experts in customer service and marketing. Collected data was analyzed using principle component (PCA) using SPSS 19.0. A result indicates that, Perceived Value, Brand Perception, Cost Effectiveness, Easy to Use, Convenience, Problem Handling, Security/Assurance and Responsiveness are important factors in customers satisfaction in e-banking it explains 48.30 per cent of variance. Contact Facilities, System Availability, Fulfillment, Efficiency and Compensation are comparatively less important because these dimensions explain 21.70 per cent of variance in customers’ satisfaction. Security/Assurance, Responsiveness, Easy to Use, Cost Effectiveness and Compensation are predictors of brand perception in e-banking and Fulfillment, Efficiency, Security/Assurance, Responsiveness, Convenience, Cost Effectiveness, Problem Handling and Compensation are predictors of perceived value in e-banking. Keywords: Service quality, Brand perception, Perceived value, Satisfaction, E-Banking

1. INTRODUCTION A customer satisfaction is an ambiguous and abstract concept. Actual manifestation of the state of satisfaction will vary from person to person, product to product and service to service. The state of satisfaction depends on a number of factors which consolidate as psychological, economic and physical factors. The quality of service is one of the major determinants of the customer satisfaction (Parasuraman, Zeithaml and Barry, 1985; 1998; Cronin and Taylor, 1994; Gronroos ,1984; Zeithaml, Parasuraman, and Malhotra, 2000; Schefter and Reichheld, 2000; Gommans, Krishnanand Scheffold, 2001; Yoo and Donthu, 2001 and Loiacono, Watson and Goodhue, 2002). Many researchers and experts mentioned that, service quality can be enhanced by using advanced information and communication technology (ICT). Today, almost all banks in are adopted ICT as a mean of enhance service quality of banking services. They are providing ICT based e-services to their customers which is called as e-banking, internet banking or online banking etc. It brings connivance, customer centricity, enhance service quality and cost effectiveness in the

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banking services and increasing customers’ satisfaction in banking services. Even now, customers are also evaluating their banks in the light of e-service era. However, author felt that, there are may be some possibilities of gaps between customers’ expectations and actual perception of service quality, brand perception and perceived value in e-banking. Therefore, author has conducted this research to identify the major factors affecting on customers’ satisfaction in e-banking in Indian context.

2. REVIEW OF LITERATURE There is hug literature available relation to measuring service quality and customer satisfaction relating to



online and offline services. It elaborate that, there is strong relationship between service quality, brand perception and perceived value with customer satisfaction and loyalty. 2.1. Service quality and customer satisfaction The relationship between expectation, perceived service quality and customers satisfaction have been investigated in a number of researches (Zeithaml, et al, 1988). They found that, there is very strong relationship between quality of service and customer satisfaction (Parasuraman et al, 1985; 1988; ). Increase in service quality of the banks can satisfy and develop attitudinal loyalty which ultimately retains valued customers (Nadiri, et al 2009). The higher level of perceived service quality results in increased customer satisfaction. When perceived service quality is less than expected service quality customer will be dissatisfied (Jain and Gupta, 2004). According to Cronin and Taylor (1992) satisfaction super ordinate to quality-that quality is one of the service dimensions factored in to customer satisfaction judgment. 2.2. Brand reputation and customer satisfaction Marketing literature including NCSI and ACSI literature examined positive of the link between the satisfaction and the brand reputation. Wafa et al (2009) mentioned that, the nature and amount of a consumer's experience with an evoked set of brands. Perceived brand reputation has significant impacts on customer satisfaction and a consumer's beliefs about brand are derived from personal use experience, word-of-mouth endorsements/criticisms, and/or the marketing efforts of companies. (Woodruff et. al., 1983). A brand perception is also one of the important aspects of in banking sector. Perceived brand reputation in banking sector refers to the banks reputation and expiating place of bank in the banking industry (Che-Ha and Hashim, 2007; Reynolds, 2007). It measures experience of the customer how he/she fill with this brand and their services. A perceived overall brand performance is determined by some combination of beliefs about the brand's various performance dimensions (Woodruff et al., 1983; Che-Ha and Hashim, 2007). A brand perception is important factor to service provides because, satisfied customer with brand will recommends that service to others. ISSN 2067- 2462

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2.3. Perceived value Apart from brand perception, perceived value also one of most important constructs of the customer satisfaction measurement; it is used to assess the actual benefits of the service. Perceived value is compression between price or charges paid for the services by the customer as sacrifice of the money and utility derived by service perception (Holbrook, 1994; Bolton and Drew, 1991; Cronin and Taylor, 1992; 1994). In this study we have assessed overall satisfaction also it can be say cumulative satisfaction. It is overall perception and concluded remark of the customer regarding alternative banking channel used by customers. The overall remark of the customer is based on his/her expectations about various aspects of service quality



and actual service he/she perceived by the particular bank. 2.4. Conceptualization and Measurement of Customer Satisfaction The term ‘e-customer’ refers to the online purchaser/users whether it is individual or corporate. It can be define as “e-customer is an individual or corporate one who are using e-portals to purchase, ordering, receiving information and paying price / charges through various types of e-channels” i.e. internet banking, mobile banking, ATM, POS, credit cards, debit cards and other electronic devises. TABLE 1 - SNAP SHOT OF LITERATURE REVIEW Service/Scale

Author/s

1

Kano’s Model

Kano (1984)

2

Perceived Model

Gronroos (1984)

3

SERVQUAL

4

SERVFERF

5

E-commerce

Schefter (2000)

6

e-SQ and eSERVQUAL

Zeithaml, Parasuraman, and Malhotra (2000)

7

e-Satisfaction

Szymanski and Hise (2000)

8

E-loyalty

Gommans, Krishnan, and Scheffold (2001)

9

SITEQUAL

Yoo and Donthu (2001)

10

WebQual

Loiacono, Watson Goodhue (2002)

11

e-Satisfaction

12

E-S-QUAL and E-RecS-QUAL

Anderson and Srinivasan (2003) Parasuraman, Zeithaml & Malhotra in (2005)

13

Movie-Related Websites

Cho Yoon, and Joseph Ha (2008),

14

BANKZOT

Nadiri, et al (2009)

SQ

Parasuraman, Zeithaml and Barry (1985; 1998) Cronin and Taylor (1994) and

Reichheld

and

Attributes/Dimensions Used in the Study Must-be requirements, One-dimensional requirements, Attractive requirements, Reverse Quality Technical service quality, Functional service quality, Corporate image Reliability, Responsiveness, Assurance, Empathy and Tangibles Reliability, Responsiveness, Assurance, Empathy and Tangibles Customer support, on-time delivery, compelling product presentations, convenient and reasonably priced shipping and handling, clear and trustworthy privacy efficiency, reliability, fulfilment, privacy, responsiveness, compensation, and contact Convenience, Merchandising, Easiness, Information, Deign, Financial security Website & Technology, Value Proposition, Customer Service, Brand Building and Trust & Security Ease of use, aesthetic design, processing speed, and security Information fit to task, interactivity, trust, responsiveness, design, intuitiveness, visual appeal, innovativeness, websites flow, integrated communication, business process and viable substitute, accessibility, speed, navigability and site content. convenience motivation, purchase size, inertia, trust and perceived value Efficiency Fulfilment, System availability, Privacy, Responsiveness, Compensation and Contact Ease of use, Usefulness, involvement, information factor, Convenience, technology, Community Factor, Entertainment Factors, Brand Name, Price Factor Desired, adequate, predicted and perceived service quality

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Traditionally the level of customer satisfaction was determined by the quality of services, price and purchasing process. Consequently, the level of e-satisfaction is also determined by the quality of e-services, the price level and e-purchasing process (Ming, 2003). Literature on e-consumers satisfaction realizes that there are different factors of e-customers satisfaction than formal customer, e-satisfaction are modeled as the consequences of attitude toward the e-portals (Chen and Chen, 2009). After review of the literature some important factors of e-satisfaction were extracted (Table 1). There are number of scales and instruments are available to assess service quality. Available literature shows that, the customer satisfaction is measured via service quality and service quality measured by various measurement tools and instruments developed by



various researchers (Riscinto-Kozub, 2008) and marketing consultancy organisations i.e. Gronroos’s ‘Perceived Service Quality Model, SERVQUAL, SERVPERF, SITQUAL, WEBQUAL, etc (Table 1).

3. OBJECTIVES AND RESEARCH QUESTIONS As per the prior studies conducted in the area of customer satisfaction indicates that service quality, brand perception and perceived value in service are major factors affecting on customers’ satisfaction in service sector. Therefore the present study was conducted based on followings objectives;

To assess the impact of service quality dimensions on customers satisfaction in E-banking?

To assess the impact of brand perception on customers satisfaction in E-banking?

To assess the impact of perceived value of e-banking service on customers satisfaction?

4. HYPOTHESES OF THE STUDY Based on review of literature and considering rational views of the experts in banking and service marketing following hypotheses were formulated; H1: All service quality dimensions under study are not significantly contributing to customer satisfaction in ebanking H2: All service quality dimensions under study are not significantly contributing to brand perception in ebanking H3: All service quality dimensions under study are not significantly contributing to perceived value in ebanking

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5. DATA AND METHODS The data were collected from customer (N=200) of public and private sector in Satara city of Maharashtra during the month of May to August 2010. Survey was conducted using Likert based questionnaire ranging from 1= Strongly Disagree to 5= Strongly Agree. All 36 statements are positively worded (See Table 3 for numbers of dimension wise statements used in the scale) and before the filling questionnaire author has clarify the objectives of the study to respondents. The respondents were selected using judgmental sampling method; because, banks are not providing customers’ name and information due to legal restrictions.



Prior conducting final survey and after final survey reliability of constructs was tested using Cronbach’s alpha test using SPSS 19.0. Before to the final statistical analysis data screening method was used and 10 incomplete and out of order questionnaires were eliminated and only 190 usable questionnaires were used. Thereby, the gathered raw data were aggregated according to dimensions under study and principle component analysis and multiple regression tests were performed to identify the major factors which influencing customers’ satisfaction in e-banking.

6. RESULTS AND FINDINGS 6.1. Demographic profile of the respondents Figure 1 indicates demographic information of the (N=190) respondents, consisting 17.4% of State Bank of India, 14.7% of Bank of Baroda, 13.2% of Corporation Bank, 18.4% of IDBI Bank, 15.8% of Axis Bank and 20.5% of HDFC Bank (63.7% of Public Sector and 36.3% of private sector Banks). Figure 1 also indicates that, 10% of Credit Card users and 28% of Debit/ATM card users, 27% of Electronic Fund Transfer facilities users, 27% of MICR clearing facilities users, 6% of Internet baking users and 2% of Mobile banking service users.

FIGURE 1 – GRAPHICAL REPRESANTION OF THE RESULTS

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Table 2 shows that, 82.1% of the respondents were male, 17.9 % were female. In terms of age group, 20% were below 25 years, 34.7% of 25 to 35 years, 35.8% were 36 to 50 years and 9.5% were 51 to 60 years old out of 190 respondents. There were no respondent above 60 years however; some retired persons from military and army were covered under study as samples. Educational status of the respondents indicates that 4.2% of respondents were below HSC, 5.3% of HSC, 49.5% of graduate and 41.1% of post graduates. There were 31.6% of employees and 36.3% of businessmen as a core respondent who were using most of alternative channels. However, 13.7% of professional (doctor, engineers, charted accountants, investment consultants, insurance agents etc.), 14.2% of students and 4.2% of retired persons also covered in this



study..

25 Lakh Dependents Total Below 25 25-35 36-50 51-60 Total Source: Survey

TABLE 2 - DEMOGRAPHIC PROFILE OF THE RESPONDENTS Frequency Percent Frequency 39 20.5